The state budget deficit jumped to 4% in March - up from 3.5% in February. This emerges from an initial estimate published by the Treasury Department this evening. It should be noted that this is only the beginning of the road - according to the deficit estimates will be much higher following the Koran crisis.
According to the ministry's figures, the government's budget activity in March measured a deficit of NIS 15.9 billion, compared with March last year when a budget deficit of NIS 3.6 billion was measured.
Since January, the deficit has reached NIS 13.3 billion, compared with NIS 9.3 billion in the corresponding period last year. The Treasury Department explains that at this stage, the significant effect is on the revenue side, which is reflected in a sharp decline in tax revenues, part initiated as a deferral of VAT payments, and the National Insurance Institute does not deposit excess income on expenses generated from its activities until the end of March, in order to maintain balances for the following months. The institution is expected to end with a flow deficit.
Total tax revenues from the beginning of the year totaled NIS 81.8 billion, a nominal decrease of 8.6% compared to the same period last year.
Regarding government spending, which was still limited in March's 2019 budget, a 3.4% decline from the beginning of the year was recorded, while the civilian system saw a 1.2% decline in the security system, which was more flexible in postponing and advancing payments, down 11.3%. The government approved a breach of NIS 50 billion in ongoing budget frameworks for the budget and another NIS 40 billion for expansion and recycling of government debt. So it is likely that next month will see a significant jump in spending, given the government's approved plan over the past two weeks.
An examination of the types of tax revenues reveals that the deferral of VAT payments to businesses with a turnover of up to NIS 1.5 million from March to 27.4 resulted in a decrease of about NIS 800 million in March revenues, in addition to some increase in income tax and VAT refunds that reached the volume of NIS 1.8 billion in March.
While in March 2019, NIS 9.5 billion was collected, only NIS 6.6 billion was collected in March of this year. A 14% reduction in the tax authority neutralized the deferral of VAT to small businesses, but estimated that this was done in short, and the decrease in VAT revenue was attributed to a decrease in imports. The purchase tax actually rose significantly, by 21% compared to last March and stood at NIS 2 billion, mainly from cigarette and tobacco imports.
An interesting event that emerged as part of the tax payment analysis is that last month, directives were issued to evacuate vehicles from licensed warehouses for the purpose of receiving essential goods in an emergency, which increased the payment on imports of those vehicles, so that despite the fall in hybrids imports following the change in taxation, there was an increase in import revenue. NIS 400 million in March this year. In March, tax revenue was down 7%.
The income tax on self-employed and corporate clients amounted to NIS 5.1 billion. When the decline in self-employed income was 11%, while the decrease in corporate income was 21%. The explanation for this, according to the Tax Authority, is a fall in the rate of business advances in light of the economic downturn and expected decline in profitability this year.
In fact, the collection of income tax from employees rose from NIS 8.5 billion, compared with NIS 9.6 billion in March. It should be borne in mind that the massive non-paid leave occurred in the last few weeks of March, and that the income tax is also paid on unemployment benefits (although less significant given that they are lower than the actual wage).
The tax collection from the capital market, which is known for volatility, recorded a very high exception, where collection was NIS 680 million - a 175% increase over March 2019. At least its share in the high realizations in the capital market can be explained.
Real estate taxation saw a slight increase (from $ 900 million last March to a billion in March this year), with a 14% decrease in praise tax, a 16% increase in purchase tax.